Investing Basics

What Is a Bond?

A bond is a loan made by an investor to a government, company, or other issuer, which promises to pay interest (the coupon) at set intervals and repay the face value on a maturity date. Bonds are traded, and their market prices move in the opposite direction to interest rates.

Price and Yield

When market interest rates rise, existing bonds with lower coupons become less attractive, so their prices fall; when rates fall, prices rise.

Risks

Bonds carry credit risk (the issuer may not pay) and interest rate risk (prices change with rates).

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🔗 Related Terms

Stock Interest Rate Asset Allocation Certificate of Deposit (CD)

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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.